Thursday, February 13, 2014

Bullet Point Analysis: Verizon Wireless' More Everything Plans

WHAT IS IT?Verizon Wireless modified their postpaid rate plans. There are 4 key elements of the announcement. 1) More Everything plans are the new face of postpaid plans. The old plans (likely still in the system) were named Share Everything plans. Below are the new data thresholds and associated price points.

2) Unlimited international messaging to complement unlimited domestic messaging will be included in these More Everything plans.3) Each More Everything plan line receives 25 GB of cloud storage (a.k.a. Verizon Cloud), an upgrade from the norm of 5GB, which also happens to be the standard offerings from AT&T and Sprint. 4) High-value Verizon Edge customers will get a break on per smartphone "access" pricing, $10/month off monthly smartphone access for data allowances up to 8 GB, and $20 off monthly smartphone access on plans of 10 GB and higher. ANALYSISThere are plenty of media analysis looking at the consumer, and I won't replicate that. The takeaway for this new action is that it's focused on AT&T. Verizon Wireless and AT&T have long been each other's primary competitor as both companies position themselves as premium carriers.Verizon Wireless' More Everything move follows a series of back and forths in industry rate plan adjustments. Many can argue T-Mobile's UnCarrier 1.0, 2.0, 3.0 started it all off in 2013. However, AT&T's Mobile Share Value plans launched on December 5, 2013 help start the ball rolling with Verizon Wireless. AT&T's and T-Mobile's (UnCarrier 4.0) Paid switching programs joined by Sprint's January Framily plan announcement also added to the competitive atmosphere. Though there was a minor Verizon adjustment in January, that was to help to upgrade their featurephone base. However, things got a bit more complicated at the beginning of February when AT&T announced $15 per smartphone line for non-2 year {Next or customer supplied) Mobile Share Value plans with 10 GB or greater thresholds.

Looking at More Everything side by side against Mobile Share Value plans, Verizon Wireless did a quick turnaround on their 250 MB plan by dropping the price $5 less than a month after introduction. It also provides some logic to double the price point to get to the next data level (250 MB/$15 --> 500 MB/$30).

Aside from the new plans under $60, Verizon Wireless didn't touch the rest of the portfolio. Verizon now opens the battleground on lower data thresholds with 5 options below $70 compared to AT&T's 3 choices. At the same data levels of 1 & 2 GB, Verizon Wireless turned a pricing disadvantage to one that beats AT&T by $5/month.

Unlimited international messaging is a feature coup. Whether consumers do or do not have international contacts, a lot of marketing mileage can be drawn from this feature. The segment to possibly benefit in this feature are the business/enterprise customers who are more likely to have international contacts. This also helps somewhat to negate some OTT lock but it'll take time to wean users off free OTT (e.g., WhatsApp, Viber, Tango, Sykpe, etc.) services.

With 25 GB included storage, Verizon Wireless clearly bests competitors' 5 GB but does it matter?

Next and Edge monthly smartphone "access" pricing. AT&T Next customers were paying $25/smartphone for any data plan below 10 GB, otherwise they would be at $15/smartphone. Verizon's move doesn't match Next pricing. For 8 GB and below, Edge customers pay $30/smartphone whereas 10 GB or higher plan customers pay $20/smartphone. Regular two year contract (subsidized device) pricing remains at $40/smartphone for both carriers.

COMPETITIVE IMPACT?

AT&T is now at a disadvantage and needs to respond. Matching price at 1 and 2 GB is the logical route. Whether they match with a new 3GB tier and the $60 price point is up in the air and something they have to analyze their customers' data consumption habits at the 2 and 4 GB tiers.

Unlimited and free international messaging is serious and all carriers business/enterprise accounts are now potentially vulnerable and at a disadvantage. This feature provides Verizon Wireless enterprise reps some differentiating factor to tout. The playing field may be changed, however, with in-country unlimited messaging if a business plan can be justified.

Competitors with baked-in cloud storage may not have to take any rash decisions as consumers have abundant OTT options (e.g., Google Drive, Microsoft OneDrive, Apple iCloud, Amazon Cloud, Dropbox, etc.) at their disposal. The unifying challenge for carriers is to make their own carrier cloud storage relevant.

Since Edge isn't as high of a priority for Verizon (AT&T in comparison is more aggressive with Next) the new smartphone price points help the existing base but price-wise won't do anything to help switch AT&T Next customers.

Timing wise, we're midway through 1Q14. The ink is still a bit wet on AT&T's early December Mobile Share Value plans but we've seen these monolithic corporations become quite nimble in providing rapid competitive responses. The stakes are too high these days.

Want to talk about this and other carrier moves more? Contact me at william.ho (at) 556ventures.com.